Commonwealth of Australia v Davis Samuel Pty Ltd

• Jurisdiction: Australian Capital Territory
• Judge: Refshauge J
• Judgment Date: 21 November 2014
• Court: Supreme Court of ACT
• Docket Number: File Number(s): SC 75 of 1999
• Date: 21 November 2014

[2014] ACTSC 312

SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY

Before:

Refshauge J

File Number(s): SC 75 of 1999

Commonwealth of Australia

(Plaintiff)

and

Davis Samuel Pty Ltd

(First Defendant)

David John Muir

(Second Defendant)

Callform Pty Limited

(Third Defendant)

Peter Michael Cain

(Fourth Defendant)

Allan Paul Endresz

(Fifth Defendant)

CTC Resources NL ACN 009 061 036

(Sixth Defendant)

Jozsef Endresz

(Seventh Defendant)

Dawn May Endresz

(Eighth Defendant)

William Arthur Forge

(Ninth Defendant)

Kamanga Holdings Pty Limited ACN 003 316 292

(Tenth Defendant)

Pellon Pty Limited ACN 082 375 951

(Eleventh Defendant)

Michael McCann

(Twelfth Defendant)

Amative Pty Limited ACN 082 375 924

(Thirteenth Defendant)

Mark Joseph Endresz

(Fourteenth Defendant)

Bisoya Pty Limited ACN 003 016 242

(Fifteenth Defendant)

Winton Oil NL ACN 001 863 878

(Sixteenth Defendant)

Quancorp Pty Limited ACN 002 755 133

(Seventeenth Defendant)

Allan Paul Endresz as representative of the members of “Border Basketball Association Inc” an unincorporated association

(Eighteenth Defendant)

Rodney James Endresz

(Nineteenth Defendant)

Joy Beverley Endresz

(Twentieth Defendant)

Tresmonay Pty Limited ACN 073 120 635

(Twenty-first Defendant)

ACT Organics Pty Ltd ACN 008 628 662

(Twenty-second Defendant)

Graham McCann Pty Limited ACN 008 653 969

(Twenty-third Defendant)

Sandra Endresz

(Twenty-fourth Defendant)

Lorraine Olive Forge

(Twenty-fifth Defendant)

Christopher Muir

(Twenty-sixth Defendant)

TNG Limited ACN 008 817 023

(Twenty-seventh Defendant)

Darren Smailes

(Twenty-eighth Defendant)

Shane Smailes

(Twenty-ninth Defendant)

Peter John Clark

(Third Party)

Representation:

Counsel:

Mr M Slattery QC and Mr J Hogan-Doran (Plaintiff)

Mr P Cain (First Defendant)

No appearance (Second Defendant)

No appearance (Third Defendant)

In person (Fourth Defendant)

In person (Fifth Defendant)

Mr P Cain (Sixth Defendant)

In person (Seventh Defendant)

In person (Eighth Defendant)

In person (Ninth Defendant)

No appearance (Tenth Defendant)

No appearance (Eleventh Defendant)

No appearance (Twelfth Defendant)

No appearance (Thirteenth Defendant)

No appearance (Fourteenth Defendant)

Mr P Cain (Fifteenth Defendant)

Mr P Cain (Sixteenth Defendant)

No appearance (Seventeenth Defendant)

No appearance (Eighteenth Defendant)

No appearance (Nineteenth Defendant)

In person (Twentieth Defendant)

Mr P Cain (Twenty-first Defendant)

No appearance (Twenty-second Defendant)

No appearance (Twenty-third Defendant)

No appearance (Twenty-fourth Defendant)

No appearance (Twenty-fifth Defendant)

No appearance (Twenty-sixth Defendant)

Mr J Giles (Twenty-seventh Defendant)

No appearance (Twenty-eighth Defendant)

No appearance (Twenty-ninth Defendant)

Mr P Cain (Third Party)

Cases Cited:

Alemite Lubrequip Pty Ltd v Adams(1997) 41 NSWLR 45

Australian Securities Commission v AS Nominees Limited(1995) 62 FCR 504

Baden v Soci?t? Generale pour Favoriser le Developpement du Commerce et de l'industrie en France SA[1993] 1 WLR 509

Banque Commerciale SA (En Liquidation) v Akhil Holdings Ltd (1990) 167 CLR 279

Barnes v Addy(1874) LR 9 Ch App 244

Baxter v Obacelo Pty Ltd(2001) 205 CLR 635

Brady v Stapleton(1952) 88 CLR 322

Canberra Data Centres Pty Ltd v Vibe Constructions (ACT) Pty Ltd (2010) 4 ACTLR 114

Canson Enterprises Ltd v Boughton[1991] 3 SCR 534

Castellan v Electric Power Transmission Pty Ltd (1967) 69 SR(NSW) 159

Chameleon Mining NL v Murchison Metals Ltd[2010] FCA 1129

Commonwealth v Davis Samuel Pty Ltd (No 7) (2013) 95 ACSR 258

Critchley v Conway[2009] NSWCA 297

Earl of Gainsborough v Watcombe Terra Cotta Clay Co (1885) 53 LT 116

Foskett v McKeown[2001] 1 AC 102

Gates v City Mutual Life Assurance Society Ltd(1986) 160 CLR 1

Gould v The Mount Oxide Mines Ltd (In Liquidation)(1916) 22 CLR 490

Grimaldi v Chameleon Mining NL (No 2) (2012) FCR 296

Harrison v Schipp[2001] NSWCA 13

Hillig v Darkinjung Pty Ltd (2006) 205 FLR 450

Hillman v Box (2010) 5 ACTLR 122

Hogan v Waterhouse(1991) 34 NSWLR 308

House of Spring Gardens Ltd v Point Blank Ltd [1985] FSR 327

Ingot Capital Investments Pty Ltd v Macquarie Equity Capital Markets Ltd (2008) 73 NSWLR 653

In re Diplock; Diplock v Wintle [1948] 1 Ch 465

In Re K L Tractors Ltd(1961) 106 CLR 318

Jaffray v Marshall[1993] 1 WLR 1285

Jaffray v Marshall in Target Holdings Ltd v Redferns (a firm) [1996] 1 AC 421

Johnson v Agnew[1980] AC 367

Kizbeau Pty Ltd v WG & B Pty Ltd(1995) 184 CLR 281Kriketos v Livschitz (2009) 14 BPR 26,717

Latec Investments Ltd v Hotel Terrigal Pty Ltd (in liquidation)(1965) 113 CLR 265

Leotta v Public Transport Commission(1976) 50 ALJR 666Lewis v Kation Pty Ltd (in liq)[2006] NSWSC 480

Marks v GIO Australia Holdings Ltd(1998) 196 CLR 494

McKenzie v McDonald [1927] VLR 134

McNally v Harris (No 3)[2008] NSWSC 861

Michael v Callil(1945) 72 CLR 509

Morgan Equipment Co v Rodgers (No 2) (1993) 32 NSWLR 467

Murdocca v Murdocca[2002] NSWSC 505

Murphy v Overton Investments Pty Ltd(2004) 204 ALR 26

Nestle v National Westminster Bank plc[1994] 1 All ER 118

Nocton v Lord Ashburton[1914] AC 932

O'Halloran v R T Thomas & Family Pty Ltd (1998) 45 NSWLR 262

Parsons v The Queen(1999) 195 CLR 619

Potts v Miller(1940) 64 CLR 282

Re Dawson (deceased)[1966] 2 NSWR 211

Re Mulligan (deceased)[1998] 1 NZLR 481

Re Tennant; Mortlock v Hawker(1942) 65 CLR 473

Saunders v Vautier(1841) 4 Beav 115

Secure Parking (WA) Pty Ltd v Wilson [2012] WASCA 230

Sellars v Adelaide Petroleum NL(1994) 179 CLR 332

Southwick v Moore Stephens Melbourne Pty Ltd[2008] VSCA 164

Swindle v Harrison[1997] 4 All ER 705

Tang Man Sit v Capacious Investments Ltd[1996] AC 514

Tilley v Official Receiver(1960) 103 CLR 529

Wallersteiner v Moir (No 2) [1975] 1 QB 373

Youyang Pty Ltd v Minter Ellison Morris Fletcher(2003) 212 CLR 484

Legislation Cited:

Cheques Act 1986 (Cth), s 71

Financial Management and Accountability Act 1997 (Cth)) ss, 39, 40

Jurisdiction of Courts (Cross-Vesting) Act 1987 (NSW), s 4(3)

Jurisdiction of Courts (Cross-Vesting) Act 1987 (Vic), s 4(3)

Public Governance Performance and Accountability Act 2013 (Cth), s 58

Sale of Goods Act 1954 (ACT)

Trade Practices Act (1974) (Cth), ss 82,

Trustees Act 1962 (WA), s 75

Court Procedures Rules 2006 (ACT), rr 1013, 1619(2), Pt 2.1 of Sch 2, Sch 2 Table 2.1

Financial Management and Accountability Regulation 1997 (Cth), regulation 22

Texts Cited:

JD Heydon and MJ Leeming, Jacob's Law of Trusts in Australia (7 ^th ed, 2006, LexisNexis Butterworths: Sydney) 594; [2203].

EQUITY — Election between remedies — Plaintiff can make claims in the alternative but must elect at trial which remedy it ultimately seeks — Tracing — Principle of tracing involves identification of new asset to replace old asset — Tracing is a process — Tracing is not a remedy — Tracing is for the inherent value of the asset — Asset traced into mixed fund — Plaintiff can choose property into which it traces its interests — Funds can be traced into multiple assets so long as there is no double recovery

EQUITY — Equitable compensation — Property held on constructive trust for Plaintiff — Demand made for property by Plaintiff — Plaintiff had right to call for the property — Property not returned — Failure to return property amounts to breach of fiduciary duty — Trustee has duty to preserve trust property — Trustee failed to preserve trust property — Plaintiff's claim for equitable compensation succeeds

PROCEDURE — Pleadings — Claim for equitable compensation not pleaded — Pleadings contained general claim for equitable relief — Pleadings cannot become instruments of oppression — Departure from pleadings allowable where no prejudice or unfairness suffered by Defendant — Cases not determined on pleadings — Cases determined on evidence — Departure from pleadings allowable where no objection is taken to evidence raising fresh issues — Plaintiff raised equitable compensation in opening submissions and in the course of evidence — No objection taken by Defendant — Departure from pleadings allowable in this instance

Decision:

The parties be heard on the draft orders published on 21 November 2014.

Table of Contents

Introduction	[2]
The Need for a Decision on Election	[7]
Factual background	[17]
(a) Mr Rodney Endresz and Mrs Sandra Endresz	[27]
(b) Mr Mark Endresz	[32]
(c) Lorraine Forge (‘Ms Scott’)	[35]
(d) Pine Avenue property (Quancorp)	[40]
(e) The Haven Hill property	[43]
(f) Bisoya	[47]
The Commonwealth's position	[49]
Election	[57]
Equitable Compensation	[96]
The Demand	[101]
The Commonwealth's Claim	[111]
Claim not pleaded	[121]
The appropriate remedy	[160]
Davis Samuel (No 7) has determined the claim against the Commonwealth	[165]
Conclusion of the Commonwealth's Claim for Equitable Compensation	[172]
Causation	[176]
Quantum	[184]
Interest	[240]
Double recovery	[249]
Conclusion on the claim by the Commonwealth against TNG	[261]
The Albury Defendants	[265]
General Findings against the Albury Defendants	[269]
Knowledge	[269]
Remedies – (a) Equitable Compensation	[272]
Equitable compensation and interaction with proprietary remedies arising from the trace	[282]
Remedies – (b) interest on the equitable compensation	[287]
The First Defendant, Davis Samuel Pty Ltd (Davis Samuel)	[307]
In Personam Claim for Equitable Compensation in respect of the September Funds	[307]
Detriment	[312]
Trade Practices	[315]
Ultra Vires Payment	[322]
Proprietary Claim — Hallmark Gold Shares (HLM)	[325]
The Second Defendant, David Muir (Mr David Muir)	[327]
Claim by TNG...